BROWN, Mrs Marie-Claude, Executive Officer, North Queensland Regional Organisation of Councils Committee met at 09 : 01 CHAIR ( Mrs Phillips ): I declare open this public hearing of the Standing Committee on Regional Development, Infrastructure and Transport's inquiry into local government funding and fiscal sustainability. I'd like to acknowledge the traditional custodians of the lands on which we meet today, and I pay my respects to their ancestors and their elders, past, present and future. I extend this respect to all Aboriginal and Torres Strait Islander peoples in their cultural and spiritual connections to Australia's lands and waters. I remind members of the media who may be present or listening on the web of the need to fairly and accurately report the proceedings of the committee. Although the committee does not require you to give evidence under oath, I should advise you that this hearing is a legal proceeding of the parliament and therefore has the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today attracts parliamentary privilege. I now invite you to make a brief opening statement before we proceed to discussion. Mrs Brown : Welcome to a rainy North Queensland today, a rare occurrence in the dry season. I thank the committee for inviting us to this public hearing about the local government funding and financial sustainability NQROC is a partnership between five North Queensland councils, so my comments today will be from a regional perspective. I will not make representations on behalf of an individual member council, although I may refer to individual council examples found in our submission—but always with a view to representing the region. As some NQROC members have made submissions to this inquiry, they may have been called to this public hearing. Their representations will be from their individual councils' perspective and not necessarily from the region's. Today I would like to focus on key points in our submission, including the impact of current financial arrangements like the financial assistance grants; tied versus untied grants; the impact of the Disaster Recovery Funding Framework on councils; cost shifting from the Commonwealth and the state onto local government, including regulation creep impacting councils' operational costs; and the possibility of a partnership across all tiers of government. To start, I'd like to give some context to the North Queensland councils. In alphabetical order, our members are as follows. The Burdekin Shire Council, to the south of Townsville, has a population of 17,200 people and a footprint of 5,000 square kilometres. It services two townships and about 30 coastal or rural settlements. Twenty-six per cent of their total revenue is from operating grants, capital grants or subsidies. We have Charters Towers Regional Council to the west, with a population of 12,000 across 68,000 square kilometres. That's about the size of Tasmania. They have about 10 townships and communities, and some are hundreds of kilometres away from the main centre, which is Charters Towers city. Fifty-four per cent of their total revenue is grants and subsidies. Hinchinbrook Shire Council, to the north, also has a population of 12,000 but has a smaller footprint of 2,800 square kilometres. They have eight townships and dozens of small settlements. Twenty-five per cent of their revenue is from grants. We have Palm Island Aboriginal Shire Council, 26 kilometres from the coast and the only local government in the Great Barrier Reef. They have a population of 2,500, a footprint of 59 square kilometres and seven suburbs. Because they cannot raise rates, they are 70 per cent reliant on grants. At the polar opposite, we have Townsville City Council, with a population of 204,000 people, 373 square kilometres, and 80 suburbs and townships, including Magnetic Island. They are 19 per cent reliant on grants. This gives you an overview of the variety of members that NQROC has and the differences that separate us. However, regardless of our differences, we are united in calling for the following. We're calling for the financial assistance grant to return to its one per cent standard, as it was from 1974 and through the eighties. It is disheartening that the Commonwealth sees fit to reduce the grant further in its recent budget, to 0.49 per cent. There is very little understanding of that decision in local government and the community. We would also call for a review of the disaster funding arrangements to make them simpler. Make the application simpler and the administration process simpler. At a time when all hands need to be on deck at councils, it draws a lot of time and resources away from councils' business. We're also calling for a quicker and more predictable disaster payment cycle, rather than the current regime, where councils carry the debt of disaster related expenditure, sometimes for years, before payments are made. It's compounded because disasters happen every year—sometimes several times a year. Again, the recently announced changes to the DRFA, to a fifty-fifty arrangement with the state, are sending shockwaves across disaster-prone communities. That also comes on the back of a recent announcement that the federal government would not assist flood affected farmers in the north-west of Queensland with restocking. All of those things are very concerning, and we're looking forward to engaging with the federal government and understanding their decisions. We're also calling for more untied and allocative grants to respond to community needs, rather than the current tied, competitive and/or co-contribution grant programs, which deliver on the Commonwealth's priorities but not necessarily local government priorities. They are expensive to apply for in terms of administration, preparations and sometimes consultancy. They tend to favour larger councils, because smaller councils either can't afford to apply or don't have the capacity to maintain such grants. We're calling for a targeted, coordinated and multiyear funding package, rather than the short programs that we're currently experiencing, which put us in a cycle of annual applications and provide no job security for the resources hired under those programs. We're also calling for whole-of-life costs when the Commonwealth grants an asset to a council so that the operations and maintenance can be covered and not taken out of ratepayers' pockets. Lastly, we're asking for better coordination between the Commonwealth, state and local governments in matters of policy directions, funding arrangements, management of problem waste streams and planning so that we can avoid the infrastructure cliffs. CHAIR: Thank you very much for your opening remarks. I note your submission calls—and you've mentioned it as well—for federal assistance grants to be restored to one per cent of Commonwealth taxation revenue. Given councils also receive Roads to Recovery funding, disaster funding, Black Spot funding and other Commonwealth programs, how should this committee assess total government support rather than financial assistance grants alone? Mrs Brown : I'm certain that everything you read in the submission, and everything that I will be telling you today, you've heard many, many times before. I understand also that the aim of this inquiry is to have a greater picture—the whole picture—of funding for local government. The benefit of FA grants is that they are untied and can respond to needs as decided by the local community for local government, rather than being tied to criteria that are determined outside of the local government area. That is the greatest difference, and that's why we're calling for that. There is very little funding for community assets or social infrastructure assets—playing grounds, rugby league clubs—those kinds of things that form the heart and soul of a small or regional or rural council. That's why you're hearing over and over again about FA grants. It's not just a question of money; it is also a question of how the money can be disbursed and how it can be used by local councils. It makes an enormous difference. CHAIR: Talking about some of that infrastructure—and I think you raised the 'infrastructure cliff' in your submission as well, particularly for water and sewerage assets—can you identify which assets, in your view, are most urgent, which condition data supports that assessment and what proportion of the problem is renewal rather than new infrastructure? Mrs Brown : There are two main priorities. One of the priorities of the Commonwealth, as well as the state, is to increase housing. If we start from that known fact and that desire we all have for more housing, there is currently funding—particularly through the state—about trunk infrastructure for new developments. That's very successful, it works really well and councils love it. But there is older infrastructure—and we're talking about assets that are 80 years old, 100 years old—that have just about expended their lifetime and are on the verge of collapsing. We're gathering some data right now—and I'm sorry that I can't provide that to you today—to be able to prove that assets in regional councils are actually on the verge of failing. We estimate that we probably have about 15 years of life for those assets with bandaids and with remedial work. But what we're calling on is that, where new infrastructure is delivered to new development, there are no funding programs for existing development. We're really keen to do some planning to be able to assess the program. Our reference to that—and you may be familiar with this—is that the South West Queensland ROC has done a really good, comprehensive overview of their water assets throughout their entire footprint. We're trying to copy the same type of thing so that we can actually explain what we mean by 'infrastructure cliff' for North Queensland. Along with existing water pipes, there's also the wastewater infrastructure that is required. There is an example in the submission about the Burdekin bioremediation plant—the algae plant—which was very successful and could only be achieved through government funding. It's a world first, and it has paved the way for our region to look at this system to be able to extend the life of our wastewater plants. The macroalgae plant is right next to the sewer plant in Home Hill, in Brandon, and they feed off each other. There's a bio product that can be used in fertiliser—in all kinds of different things—so it's a really good model for our region, particularly with regard to the Great Barrier Reef. The other thing, also, that we cannot forget, with regard to development in housing, is waste management. There are very few programs to invest in waste management infrastructure. Although there is desire in our region for recyclables, reuseables and renewables—a strong desire—the market hasn't quite caught up with that desire. Alternative technologies, like energy from waste, haven't quite caught up. We've done two stages of a three-stage business case on energy from waste, and the bottom line has always been the same—commercially, it's not viable; the region is too vast. Even if we extend our footprint from Cairns to Mackay, there's still not enough wasteload to be able to feed a plant with its existing technology. We're following very closely the efforts of a council somewhere in the south-east. They have smaller mobile energy-from-waste pyrolysis plants. But we're not quite there yet. So it is a bit of a catch-22. Again, there's about 15 years of landfill capacity available in our region, and we all know that this government has no appetite for landfill. We understand that. But we're caught between a rock and a hard place, where the market can't quite do it. There's the footprint problem with regard to transport of waste—it's very expensive—and we're running out of capacity in our landfill. And new development creates a lot of waste. Lots of projects out west create a lot of waste. For example, we don't have a solar-panel recycling facility in North Queensland. If you're familiar with North Queensland, you must have seen the thousands of hectares of solar farms that are being developed. Even before the life of solar panels is finished, 10 per cent of those solar panels will be disused, broken, before they're even installed. What do we do with them? Who pays for that transport to go to the south-east? We don't know yet. CHAIR: I have just one last question in this set of questions. I know you talked about the ongoing operational and maintenance costs involved with assets. In your view, should future grant applications require councils to show full lifecycle costs and how those assets will be maintained over time, regarding that 15 years? Mrs Brown: That's where the partnership comes in. We're willing to demonstrate, but you're asking for thousands of—about half a million—dollars worth of consultancy to be able to demonstrate, without necessarily knowing that we're going to get the funding. So it's a difficult position to put councils in. If we were talking to each other, if there were a mid-step in between, if we understood a little bit more not just the purpose of the grant but also how it was made and the desired outcome, if you actually understood it from our point of view—that is, what is it going to cost for us to be able to do it, and why is it that councils don't even apply to your programs?—perhaps we would be able to find our way through. But to ask a small council with 12,000 or 15,000 souls to spend $400,000 in consultancy fees to prove to you that their asset, their request, is valid without knowing if they're going to have a return on this investment—you can understand why they're holding back. CHAIR: Thank you. Deputy Chair. Ms PENFOLD: I've got a couple of different areas to cover with you. I'll just start with the disaster funding recovery arrangements and the decision to cut back to 50 per cent. What are your councils saying in terms of the impact that they anticipate with that change? Mrs Brown: It's the unknown. The thing with local government is that it's the closest government to the road, to the community, so they feel every single bump. There's apprehension as to what it actually means. At this point, because it's recent, we don't quite know, and we're trying to navigate that. But there are some signals from the federal level, particularly now, with the decline in funding the restocking for farmers, our cousins in the west. That sends the signal that perhaps there's not a whole lot of room for negotiation. The state is also pushing back saying, 'Well, perhaps.' We just don't know. But we know that, at the end of the day, the buck will stop with local government. They're the ones that will be impacted by the decision. They may or may not have an opportunity to be able to negotiate that. The other thing that happens with disaster funding arrangements is around the process. It's understood that the region has a great relationship with the Queensland Reconstruction Authority. We're negotiating with them. We're engaging with them. We understand and trust each other. That's the process of it. The mechanics of it works. But when you're asking a small council, or even a large council, to hold a debt for disaster for three years—when there may be three to four other disasters in between—you're actually asking for an extra resource to be allocated to that. My answer is that I don't know what the impact is going to be. There is apprehension in not knowing, but, based on previous experience, everybody is holding their breath. Ms PENFOLD: I'll go to your submission on a separate issue. You talk about artificial capping of infrastructure charges levied on development to fund trunk infrastructure. Can you give some more detail around that? Mrs Brown : Yes. It's more of a state policy. When a development happens in a council, the council can ask for up to a certain amount for the trunk infrastructure that they will deliver for that development to take place. But the amount that they can ask for is legislated by the state and covers about 50 per cent of what the council is actually expending. It's a real barrier for development. Ms PENFOLD: You're having to fund something at a loss, basically. Mrs Brown : It is at a loss. The council has to cover bringing in the sewage system, the road, the water and all of that to the development. That costs the council something, and they can only recoup about 50 per cent of their investment into that development. The Residential Activation Fund by the state of Queensland remedies and rebalances that to a certain extent. But our region would like the caps to be lifted so that they are more reflective—the caps have not changed in several years—and more representative of current costs, which have increased by about 30 per cent over the last several years. Ms PENFOLD: I want to go very high level right now with this next question. It has a few different parts. What about constitutional recognition of local government? You talk about financial assistance grants being at one per cent. Do you think that, in partnership with that sort of commitment, you need constitutional recognition of local government? Otherwise, states keep clipping the ticket on the way through. If there was that recognition, do you think that would change the partnership that you've spoken about, and would it therefore be more direct? Mrs Brown : It would because it creates a pathway to be in conversation and dialogue; it creates a structure for that. So, yes, federal constitutional recognition of local government would be important. Ms PENFOLD: What does partnership mean to you? Does it mean financial autonomy? Does it just mean an equal playing field? Can you give some tangibles around what you mean by partnership? Mrs Brown : For example, we would love for ALGA, our Australian local government association to be sitting at the COAG table so that, when all the states are there, there's a representative from local government there too. Ms PENFOLD: That's at the local level, but, in terms of here, what would it look like for you? Mrs Brown : It means that we have a designated spokesperson that has a relationship with the Commonwealth. With ALGA as the representative of all local governments in Australia, and with each state having a chapter of the local government association, ALGA would actually represent all local government at the table with the Commonwealth. That's the sort of mechanism we're looking for. Ms PENFOLD: Okay. CHAIR: Ms Jordan-Baird. Ms JORDAN-BAIRD: Thank you for appearing before our committee today. You represent a number of regional councils, and your submission calls for better regional collaboration and shared services. What functions could realistically be shared across councils? You mentioned the admin burden and things like grant writing, asset planning, waste management and biosecurity. What functions would you see being a shared service between councils, and what benefits would that bring to communities? Mrs Brown : I'll give you an example in relation to the states, but it can be expanded to the Commonwealth. NQROC has a number of working groups. When we have a problem, every council has the same problems in common: waste management, water management, pest management, planning, procurement. We have a number of working groups where all the councils are represented and tackle those problems together. With regard to waste management and resource recovery, we have a very highly functional group that is very successful across the state in applications. They apply to funding together. They deliver those programs together. So, instead of five applications, it's one application. They have a resource to be able to do all of those things. That resource advocates to the state. It explains to the state what the region needs. It's a shortcut, because there are some problems that, though they are handled on an individual council basis right now, there's a lot of benefit to being able to aggregate those issues and then elevate them as a regional plan. That's an example that works really well. Water is the same thing. Pest management is the same thing. We all have biosecurity standards that we need to apply, but don't ask a kangaroo or a deer which local government area it is in. The baiting program is an example in the submission. It would be great to be able to advocate for an effective baiting program across a whole entire region. The ROC network across Queensland is quite strong. Again, that feeds into that growing tree of connections and relationships. We talk to each other all the time. With regard to pest management, we do talk to each other, because, again, a deer doesn't know which region it is in. That's an example of the ROC system. Of course I'm advocating for ROC representation, because it actually works and it represents local government. That type of organic place based structure that feeds up to a larger structure works really well in Queensland. Ms JORDAN-BAIRD: Thank you. CHAIR: Mr Burnell. Mr BURNELL: Thank you, Marie-Claude, for providing evidence today. I want to get your thoughts on whether you can identify state policy issues such as infrastructure charges, rating settings and regulatory burden, and which financial sustainability issues require Commonwealth action and which are principally matters for Queensland government or councils themselves. Mrs Brown : I will go straight to product stewardship schemes. As an example, I'll talk about used tyres. Right now, the product stewardship scheme for used tyres is voluntary. That means that those in the industry may, from the goodness of their heart, participate. There are carrots, but there is absolutely no stick in enforcing that scheme. What happens is that, for whatever reason, used tyres end up in local government ravines, riverways and environments. There was even a set that ended up in Mayor Jayo of Hinchinbrook's paddock. Those things then become the responsibility of the local government, because the instrument from the Commonwealth isn't strong enough to mandate the management of used tyres. Therefore, local government has to apply to the state for a grant for an illegal dumping officer. When—and if—they find one, that funding is only good for a year, then it falls back into the same cycle. We have to apply, that person goes away because there's no job security, and used tyres still remain the responsibility of local government. With a mechanism like a mandated tyre stewardship scheme, all of that would go away. Mr BURNELL: I want to go back to the financial assistance grants and to something you said in your opening statement around the provision of the funding. I'm paraphrasing here, so, if I'm putting words in your mouth, feel free to correct me. You talked about federal government priorities versus local government priorities and you said that untied funding gives you greater flexibility to be able to fund the items that you see as priorities. Is it fair to say, though, from a federal government perspective, that there needs to be some level of accountability as to where that money is being funded into, given that we're also accountable to the voting public? Mrs Brown : Of course. We're not asking for a blank cheque. That would be irresponsible. What we're asking is to be able to—this refers to a question asked earlier. If we could participate in policy decisions, we could actually explain the impact on local government. I'll give another example. The federal government is reviewing the levels of PFAS in drinking water, which we don't disagree with, but what it means for local government is that higher, more stringent water testing is going to need to take place. Those tests are expensive, and they're not based in North Queensland, so all samples are going to need to be sent to south-east Queensland to be tested, then come back here and then we will deliver the information to you. Those are the kinds of policy conversations that we'd like to have with you. I don't believe that a government makes a policy decision to be mean. I think it's doing it with the best intent for the population of Australia and Australians. But there are some impacts that are felt at the local level, which I'm not sure that the Commonwealth is aware of. It would be great to be able to participate in those decisions and provide some feedback so that there's an understanding of the consequences. It will be very difficult for local governments, particularly small ones with a very small rate base, to be able to meet the PFAS standards. Mr BURNELL: Thank you. CHAIR: I have a question around financial assistance grants. In your role and from what you see as part of your participating councils, what do you think they mainly spend that funding on? Is there a pattern, or is it different amongst the councils? Mrs Brown : It's probably best if you ask those questions specifically. I tend to be at arm's length from that. It's things like culverts. It's still things like playgrounds. It's small granular items that actually make a community a community. I would expect that there are some local governments that are represented that will be talking to you, and it's probably best to address that question to them. CHAIR: That's great. Thank you for that. In your opening statement you made a comment about the budget and funding for the financial assistance grants. I wanted to say that funding has actually gone up from $3.4 billion in the budget to $3.6 billion for untied financial assistance grants. There's also an additional $2 billion for new housing infrastructure. What advice would you give the committee about key recommendations we could make to improve local governments' fiscal sustainability? Mrs Brown : Regarding your previous comments, the money has gone up but the cost of everything has gone up too. So, in real terms, it is less than what it used to be. While $2 billion is welcome, it's across the entire country, for quite an acute problem, so it will be a challenge to be able to—there's simply more that needs to be done. I understand that everybody comes to an inquiry requesting more money. I understand that. To answer your question, I think that for both parties to be able to find a way forward, the Commonwealth and local government, we need to be in relationship with each other, and we need to be able to talk to each other and have some mechanism to be able to do so. The suggestion of constitutional recognition, I think, is a good one. It's something that would be welcomed, because then it provides a mechanism and a pathway to be able to discuss to each other. Also, the committee should keep in mind that, while I acknowledge your request to keep the conversation at a strategic level, there is a reality to the strategy that local government experience. I'm really grateful that you actually came to Townsville and to the regions to hear how local government perceives your decisions. It's only through this dialogue that we can actually find a way forward and make every single dollar go as far as it can possibly go. CHAIR: Obviously, you're calling for the one per cent to be restored. You've got some councils in your area that are very small. Mrs Brown : Yes. CHAIR: So they're very different. Mrs Brown : Yes. Ms PENFOLD: And we've heard that wherever we've been across the country areas—that the smaller councils just don't have that ability to raise that extra revenue. Mrs Brown : That's right. CHAIR: Do you think there's a problem with the funding formula? Mrs Brown : I'm not familiar with the calculations, but what I've heard the councils say is that they don't think that the calculation fits the purpose anymore and that there needs to be a discussion, a review, on how that's calculated. There is a perception out there that the calculation tends to favour larger councils rather than smaller ones. Whether it's true or not, you'll have to ask questions to councils themselves, but there is a perception that it's biased. CHAIR: Thank you. Are there other questions? Ms PENFOLD: Yes, thank you. Mrs Brown, do you know what the estimated infrastructure renewal backlog is across NQROC councils? Mrs Brown : No, I can't tell you, but I think it's something that we're working towards. You can't fix what you can't measure, so I understand the purpose of that. But, for me to be able to tell you that, no, not yet. I'd be very happy to share that with you. We're working on it. Hopefully, we'll have it within the next year. Ms PENFOLD: It's clearly something that's of concern given you're working on trying to find a figure. Mrs Brown : Yes. Ms PENFOLD: At the heart of the matter, would your councils say, yes, the system has broken down? Given the asset ownership and responsibility that local governments fund—yet you're not even able to ever catch up funding-wise. Mrs Brown : That's right. There are a few things. We're talking about a long history, a 30- or 50-year history. The cost of those assets was a certain price and always relevant to the revenues of council. But the cost has increased exponentially, much more quickly than councils have been able to increase their revenue. The programs that, once upon a time, invested in those assets have disappeared, so there is nothing in between. It's like Swiss cheese where all the loan holes align. This phenomenon is possibly being actualised, and that's very scary. You probably are familiar with the story of Cloncurry, who ran out of water. The state had to truck water to Cloncurry, which is a tiny town 700 kilometres west of here, for months and months until they could fix the pipe. We still have time to prevent that, but that is what the infrastructure cliff means. Ms PENFOLD: You also mentioned workforce capability and being able to retain. What is missing in terms of support to enable you to engage, and do you have to carry a big consultant load in councils because you can't attract a workforce? Mrs Brown : Yes. For example, the Charters Towers Burdekin have lost their planner. It's very difficult to find planners. All the planners are being trained in South-East Queensland. They're not being trained in regions anymore. So they have to hire a consultant until they find such a thing I think there's very little incentive in the immigration schemes of the Commonwealth to relocate to the region. I'll give you an example, and I think it's a state example, but hopefully that will make sense to you. Graduate doctors from university receive a $40,000 premium to relocate to the region, but Townsville is considered a region, Palm Island is considered a region, and Hinchinbrook is considered a region. As a doctor, they're much more likely to take the money and relocate to Townsville because it's a bigger centre. The premium should be $80,000 to make it attractive for a doctor to relocate to Hinchinbrook. Hinchinbrook's hospital has changed and morphed, and it's really being revisited. But, when you talk about region, there are even degrees within the degrees. There are shades within the footprint. And that's really difficult to understand from where you're standing. It's very difficult to understand. I think it's unreasonable, but it's only through inquiries like yours that you can have an insight of saying, 'Yes, maybe we have a program to incentivise workforce to relocate to the region.' But, even then, please let local government provide you with some advice as to how that can be disbursed. Housing is an enormous problem. Housing is the key to everything at this point. Even when people want to relocate to the region, there is a lot of work not just at councils but in private sectors. They look for housing, and there isn't any. Councils have to rent properties to be able to relocate staff that are either consultants or staff that they've just hired from outside the region. Again, there is no one single silver bullet for housing, but it has affected the ability of council to hire skilled workers. Ms PENFOLD: Thank you. CHAIR: Thank you. We might finish there. Thank you very much for your attendance here today. If you have been asked to provide any additional information, would you please forward it to the secretariat by 3 July 2026. You will be sent a copy of the transcript of your evidence and will have an opportunity to request corrections to transcription errors..